Oh, How the Mighty Have Fallen (and it Ain't Over)

While we ink-stained wretches in the so-called automotive press prattle endlessly about the glories of performance and fuel economy among the plethora of wondrous new products, we remain dismal correspondents relating to the major issues facing the industry.

For example: We stand by as witless spectators as the largest and greatest automobile empire in history slowly disintegrates, as helpless as those witnessing the terror of 9/11. I speak of General Motors, which has been, within the lifetime of many scanning this blather, the most powerful industrial entity on earth. When I entered this strange little trade several decades ago, GM controlled more than 50 percent of the domestic market and was constantly threatened by an assault from Washington (based on the Sherman Antitrust Act of 1890), a last-ditch effort to prevent the so-called Chrome Colossus from driving rivals Ford and Chrysler into oblivion.

In fact, in 1976 the president of GM, Pete Estes, and his CEO, Tom Murphy, quietly set up what they called a "60-60-60" formula that involved GM's capturing 60 percent of the market while the stock hit $60 a share before the 60th birthdays of the two execs. Today, both market share and the stock price are roughly a third of those values.

It's not as if anyone hadn't warned them. In 1972 the late, much-admired former managing editor of this magazine, John Jerome, wrote The Death of the Automobile, in which he predicted massive troubles for the domestic industry. Four years before, I had written "The Gross Pointe Myopians" on these pages, warning that Japanese imports were invading California and the nation like the creatures in War of the Worlds. In 1983 I wrote The Decline and Fall of the American Automobile Industry and was lambasted as an idiot by fellow journalists and industry pooh-bahs from coast to coast. Like it or not, I was right.

Today the so-called Big Three are poised to fall below a 50-percent share of the domestic market (excluding loss-leader fleet and rental sales). According to R.L. Polk & Co., which tracks auto sales, Detroit clung to 53.6 percent of the retail market in 2004, down from 62 percent in 1999—this while Asian brands jumped more than eight percent to hold a 38.6-percent share of American business during the same period.

Worse yet, in several of the states projected to gain the most in population by 2030, the Big Three have already fallen below half the market share. This has taken place thanks to the explosion of sales of imports such as Toyota/Lexus, Honda/Acura, and Nissan/Infiniti and in spite of dismal performances by Mitsubishi, Daewoo, and Isuzu.

Keep in mind that five of these states are expected to gain nearly 50 million new residents by 2030, which only adds to the potential for further Japanese growth, based on the tastes of younger buyers and the rapidly expanding Hispanic population, both of which greatly prefer the rice-burner imports over domestic brands.

And these clouds of despair hovering over Detroit can only get worse. Not only are the South Koreans poking into the market with improved products from Hyundai, but the vast industrial empire of China looms on the horizon. The design and manufacture of automobiles is not rocket science. There is no question that the Chinese are eyeing the U.S. automobile market, and sooner rather than later world-class vehicles from Beijing or Shanghai will challenge not only the Japanese and Koreans but what is left of the American (and European) businesses.

The question nags: Can anything be done to save Detroit? Surely, unless GM, Ford, and DaimlerChrysler can shed their egregious UAW labor contracts and their budget-crushing retirement obligations, they are doomed. Beyond that they must break out of the large-SUV and light-truck markets—which they still dominate—and begin building five-star passenger automobiles that equal the imports in quality, performance, and value. The Chrysler 300C, the Ford Mustang GT, the Pontiac Solstice, etc., are serious contenders but cannot counterbalance such nightmares as the Pontiac Aztek, the dishwater-dull Buick LaCrosse, the Ford Five Hundred, etc., and the overall industry's wretched reliance on large-displacement pushrod V-6 and V-8 engines that were first designed and created more than a half-century ago.

While the Japanese pump out new models like popcorn, the Detroiters for the most part lump along with rehashed antiques year in and year out, whining that development of fresh products, some analysts maintain, costs them more than it costs their Asian rivals—which, by the way, have invaded American turf with state-of-the-art factories featuring kanban (just in time) processes that tend to leave the locals looking like buggy-whip makers.

If any vestige of the American automobile industry is to survive, it must involve state-of-the-art vehicles that are not equal to but surpass the best imports in every way. They must be conventional passenger cars, not trucks or SUVs, because sedans are at the core of the market and will remain so for the foreseeable future. Such vehicles can only be developed and sold in a growing worldwide market by smaller, leaner, meaner, more energetic and creative teams of men and women in the Motor City. It will require ugly confrontations with the UAW and the corporate retirees as well as the dealer organizations and, in some cases, inbred customer groups, but the Armageddon must come if any chance of survival exists.

Can it succeed? Perhaps, but the clock is ticking perilously close to doomsday.

Forgive me for touting a personal item here, but my wife, the lovely Lady Pamela, has written a wonderful book that was published in September. It is titled The Gift of More (FaithWalk Publishing: Grand Haven, Michigan, 2005) and deals with the tragic loss of her son (my stepson), Sean Reynolds, in 1994 to a rare form of cancer. Yet within this terrible period of our lives came a strange and inspirational message that some might term as religious, others as merely spiritual.

Either way, the book is an amazing, brilliant, heartwarming story that will brighten and inspire all who read it. For more information, visit Pamela's Web site at www.thegiftofmore.com.

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*AccuPayment estimates payments under various scenarios for budgeting and informational purposes only. AccuPayment does not state credit or lease terms that are available from a creditor or lessor, and AccuPayment is not an offer or promotion of a credit or lease transaction.